Foreign Relations of the United States, 1952–1954, Iran, 1951–1954, Volume X

888.00/8–2553

No. 355
Memorandum of Conversation, by the Assistant Secretary of State for Near Eastern, South Asian, and African Affairs (Byroade)

secret

Washington, August 25, 1953.

Subject:

• Conversation this morning regarding Iran.

Participants:

• Mr. Harold Beeley, British Embassy
• Henry A. Byroade—NEA

I told Beeley of the US plans for some immediate financial and economic assistance to Iran. I explained that we expected that our President would shortly receive a letter from either the Shah or General Zahedi requesting assistance for Iran. It was our present plan that we would answer such a request affirmatively.¹ We did not believe that we could press the Iranians at this time to be specific in their letter to the President as regards a pledge to settle the oil dispute with Britain. We hoped, however, that the letter would contain general assurances of the desire of the new Iranian Government to settle outstanding differences with friendly powers.

I explained to Beeley that our economists thought that the total amount of economic assistance to Iran over a period of a year would run about $60 million. We had already planned about $24 million which would continue through the present level of Point IV and development activities at the last year level—which corresponds to the intentions recently stated by our President to Mossadeq. We believed an additional sum in the neighborhood of $36 million would probably be required to keep the new Government going for a year if no oil revenues were forthcoming. I told Beeley that the exact details, publicity, etc. had not yet been worked out, but that I would keep in touch with him.

I stated to Beeley that I had not consulted him sooner as it had been my impression that as a result of conversations between us over the past year I felt that the British Government was aware of the fact that we would consider it necessary to provide some immediate assistance should a government come into power which appeared to offer a better chance of allowing settlement of Iran’s disputes with the West.

Mr. Beeley said he had himself always understood this to be the case and he was certain that the British Government had the same understanding. He stated that he had just received a cable from London inquiring as to our intentions. In his cable the only concern of the Foreign Office was that the US not offer such huge amount of money as to take away the incentive of the Iranian Government to arrive at an oil settlement. In the opinion of the Foreign Office sums in the order of $100 million to $200 million might produce such a lack of incentive. Beeley stated he felt certain that the Foreign Office would have no objection whatsoever to the US plans I had given him—on the contrary he felt that they would be pleased.

Mr. Beeley stated he knew that people were working over-time in London on the dual problems of re-establishment of diplomatic relations and the UK approach to an oil settlement. He stated that he believed he could present the British position to me within two days. I informed Mr. Beeley that we were looking into the problem ourselves and would greatly appreciate their views as soon as they became available.²

1. On Aug. 21 Ambassador Henderson informed the Department that the Zahedi government planned to approach the Embassy almost immediately to request urgent American financial and economic aid, which Henderson deemed necessary if the new government was to continue functioning. (Telegram 447; 788.5 MSP/8–2253)

   The Department responded on Aug. 24, informing the Ambassador that the United States was prepared to respond to an Iranian request for financial and economic aid and was sending a special economic analyst to Iran to confer with Embassy officials and prepare plans for prompt assistance. (Telegram 599; 788.5 MSP/8–2253)

   The final text of Zahedi’s letter to the President, dated Aug. 26, was transmitted in telegram 488 from Tehran, Aug. 26. (611.88/8–2653)

2. No record has been found in Department of State files of another session shortly thereafter with representatives of the British Embassy. The Embassy in London, however, informed the Department in telegram 869, Aug. 29, that it had the impression that Prime Minister Churchill was anxious to make some gesture that might allow for the resumption of Anglo-Iranian relations; that the Foreign Office recognized the seriousness of the Iranian situation and the probability that if Zahedi were to survive, he would need financial assistance; and that, consequently, the Foreign Office favored U.S. interim emergency aid, provided that it was not so much as to lessen Iran’s incentive to settle the oil dispute. (888.2553/8–2953)